In 2026, the logic of commodities will change! Credit Suisse: "The emotional game" is fading, and the dominance will return to fundamentals.

Notice that, in the quiet holiday trading at the end of the year, the global commodity market presents a complex picture: precious metals shine all around under the dual push of interest rate cuts expectations and geopolitical risk aversion demand, reaching historical highs; while the energy and Shenzhen Agricultural Power Group markets are fluctuating in the tug of war between fundamental factors and weather risks. Claudio Martucci, head of sales at UBS, said that although market liquidity was thin due to the holidays, amplifying price volatility in some individual commodities, capital flows clearly pointed towards risk avoidance and defense. Overall, the market is gearing up for a new start in 2026, with the Federal Reserve's policy direction and macroeconomic data becoming key to future trends. Precious metals: "Epic" celebration driven by emotions Last week, the precious metals market became the absolute focus in the commodity sector. Driven by expectations of Federal Reserve interest rate cuts in 2026 and geopolitical risk aversion sentiment, the price of gold reached a historical high. Silver's performance was particularly remarkable, with a monthly increase that was the highest since 1979, and a weekly increase of 16.08%. Platinum and palladium also reached multi-year highs simultaneously. However, the hidden concerns behind this surge should not be overlooked. UBS points out that the weak liquidity at the end of the year magnified price fluctuations, and the current rise is largely driven by sentiment and technical momentum, rather than solid industry fundamentals. This means that as market sentiment returns to rationality, assets with such high premiums may face risks of withdrawal. Energy and industrial metals: Complex game of policy and supply and demand Performance in the energy market is mixed. Crude oil prices fluctuated around $58 per barrel, supported by US actions in Venezuela and the Russia-Ukraine conflict, but ample global supply limited the uptrend. It is worth noting that UBS states that the US government tends to manage inflation through low oil prices, setting an "invisible floor" of around $50 for oil prices. The natural gas market has become synonymous with "volatility", with prices frequently jumping due to changes in weather forecasts. In terms of industrial metals, due to market optimism about China's economic support policies and strong demand for metals such as copper and aluminum in green energy infrastructure, prices have remained near historic highs. Agriculture and livestock: Profits reaped under climate risks The Shenzhen Agricultural Power Group market is facing a double test from South American weather and geopolitical risks. Although corn and soybeans experienced a "Santa Claus rally" early on due to expectations of Chinese demand, they came under pressure later due to selling pressure from farmers cashing out. A notable warning sign is that soybean exports have dropped by nearly a third year-on-year, which could affect planting decisions in 2026. In contrast, corn exports surged by 30% year-on-year, becoming a highlight of the grain market. In the livestock sector, the fundamentals of the cattle market remain strong, but the pork market is facing downward pressure due to increased supply. Will 2026 be a turning point? As we enter the new year holiday, market liquidity is expected to remain low, further amplifying the impact of any unexpected news on prices. UBS warns investors to watch for the minutes from the December Federal Reserve meeting and the US initial jobless claims data to be released this Tuesday. Overall, the commodity market is at a critical point of differentiation at a high level. While precious metals are currently on a roll, their high valuation is challenging investors' psychological thresholds; and the energy and agriculture markets are searching for new pricing logics in the midst of policy intervention and changing weather. For the layout of 2026, the return of fundamentals may replace the current sentiment game and become the main theme of the market.